Coral8 Enhances Engine, Says CEP Extending Reach
March 17, 2008
Data quality monitoring, fraud detection for block-trading venues, and real-time risk management are a few of the ever-growing number of applications that Wall Street is finding for complex event processing (CEP) technology. Coral8 executives cite such uses as a key reason for an upgrade to its CEP engine.
Generally available as of last week, the new engine--version 5.2--includes external query capabilities and enhancements to its pattern-matching and security features.
"The first applications of complex event processing by Wall Street firms had to do with algorithmic trading," explained Mark Tsimelzon, president, founder and CTO of Mountain View, Calif.-based Coral8. "But more and more, we find that our customers are using it for other applications such as risk monitoring or fraud detection"--areas in which access to real-time data is critical.
One of the new features, Tsimelzon said, was recommended by a large block-trading platform that was concerned about fraud. Though the venue had sophisticated rules, it lacked the technology to track in real time whether they were being observed.
"Now, when the CEP engine finds that a pattern of events occurs, it immediately and automatically summarizes a list of individual events that represent this pattern so that a whole audit trail is automatically composed," said Tsimelzon. With CEP technology, the records can be produced in seconds or minutes, he added, as opposed to the days or weeks that it used to take.
Coral8 has also sponsored a study that looks at two CEP development projects--one at a retail-oriented discount brokerage, the other a large securities firm. The report--"Real-Time Risk and Reward: CEP Outside the Algorithmic Box"--was authored by Adam Honore, senior analyst at Boston-based research firm Aite Group.
"Increasingly, you will start to find CEP usage creep beyond front-office activities," said Honore. "We are encouraging people to experiment more broadly with this technology and try to think outside the box." He noted that Aite Group estimates that event processing technology spending will rise from $50 million in 2006 to $990 million in 2010, with financial services firms fueling a significant portion of that growth.
According to the Aite report, new CEP uses include news sentiment analysis, back-office operations and reconciliation activities, monitoring of servers, and better IT management of data across an enterprise.
The large brokerage in the study used event processing technology to create a real-time risk and position management platform. The firm's developers, accustomed to Java programming, were able to learn how to develop CEP applications fairly quickly, according to Aite, and built the platform within three months, with subsequent updates rolled out every eight to 12 weeks.
"The most salient point about that installation is the way that the firm was able to do it in a very non-disruptive way to existing technology," said Honore, who noted that CEP helped the firm to construct a platform that worked well with proprietary platforms already in place. The firm is now considering using the technology for systems monitoring, latency testing and market data connectivity.
According to David Barnett, VP of marketing at Real-Time Innovations, a Sunnyvale, Calif.-based messaging software provider that incorporates Coral8's engine in its products, CEP is seeing broader usage because of its ability to reduce development times and create more intelligent data management applications. "With CEP, you can build a lot more intelligence into the infrastructure itself," he said.
